Drawback on the material on which Cenvat Credit has been taken

[VINOD KUMAR]

Dear experts, as per Rule 2 and 3 of Drawback rules,

"drawback" in relation to any goods manufactured in India and exported, means the rebate of duty or tax, as the case may be, chargeable on any imported materials or excisable materials used or taxable services used as input services in the manufacture of such goods; and

the amount of drawback is reduced by taking into account the amount of Cenvat Credit availed.

Why a manufacturer who has availed the Cenvat of all the taxes/duties (i.e. excise duty+sales tax+CST+Service Tax (on domestic material) and CVD+SAD+Service Tax on imported materia) is given drawback of customs portion.

Please do reply.

Thank You sir.

AI Summary

Duty drawback and Cenvat credit: drawback excludes portions where Cenvat was availed, but all-industry rates may apply.
Duty drawback rebates taxes or duties on inputs used in exported goods but is reduced by any Cenvat credit availed; VAT/CST portions are excluded. Basic Customs Duty paid on imported inputs forms part of cost and is eligible for drawback when such inputs are exported in finished goods, except where Cenvat credit has been claimed on that duty. All Industry Duty Drawback provides a predetermined rate that may apply irrespective of Cenvat uptake. Service tax on imports may be claimed via refund or drawback only when Cenvat has not been availed. Bank Realisation Certificate and foreign exchange realisation are required for export benefits.